Salary components for saving tax.

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2011 Hi All,

I wanted to know if salary is paid under the following heads/components would they be exempt from tax like

a)If food coupons are given.
b)Given as telephone allowance

Currently the components shown in the pay slip are
a)Basic
b)HRA
c)Medical
d)Conveyance
e)L.T.A (if tickets are given)
f)Remaining is shown as special allowance.

Please let me know what are the components that can be shown so that employee gets tax exemption.

Also, please let me know how to compute or give LTA benefit to employees,its applicability is it once in a block of in a block of 4 A.Y (to and fro).Should the employer take a declaration from the employee's joining the organisation in between and claims LTA, stating that the employer has not availed the benefit from his previous employer.

Also, kindly forward the format for such declaration if any.

Regards.

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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16 October 2011 You will get the exemption for the following :-
HRA : see the relevat section(formula) for amount of deduction
Medical : exempt upto max Rs 1250 pm provided valid bills and doctors prescription are submitted.
Conveyance : exempt to the extent of actual expenses (but max 800pm)
L.T.A. : see provisions(calculation) (take a declaration if your employers asks for it, else you dont need any declaration)
Food coupon exempt : Rs 50 per meal. Based on optimum calculation, something like Rs3500 pm can be claimed as exempt (see relevant provisions)

No deductions for special allowance and telephone allowance.

Apart from these you get deduction for professional tax paid.
Also you can get benefits for lic premium paid, cont to PPF, cont to PF, investments in Post office MIS deposit scheme, etc under chap VIA. And also tax benefits for amount invested in NHAI bonds u/s 80CCF

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ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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16 October 2011 Well Said......

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Querist : Anonymous

Querist : Anonymous (Querist)

16 October 2011 HiSumit,

Thank you so much.

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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16 October 2011 My pleasure !!

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Querist : Anonymous

Querist : Anonymous (Querist)

21 October 2011 Hi Sumeet,

This is further to your update. Others are of the view that apart from food coupons if salary is paid as

a) Reimbursement of telephone expense
b)car expense,sweeper or such other expenses will not be taxed.

However, I was under the assumption that after the FBT was removed the same would not be taxable in the hands of employees as perquisites.

Can you please clarify the same again.

Thanks in advance.
Regards.

Querist : Anonymous

Querist : Anonymous (Querist)

27 October 2011 Hi Sumit/All,

Can you please answer the above query.

Thanks in advance.

Regards.

Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2011 Hi Sumit/All,

Can someone answer to the above at the earliest.

Regards.

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CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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05 November 2011 Hi,

If you are receiving telephone allowance as a aprt of your CTC, then it will be taxable.
But if your telephone (includes mobile) expenses incurred by you on behalf of your employer is reimbursed, then it will be exempted!

Car expense will be taxable in your hands as follows :-

If the company provides you a car for personal and official purposes and reimburses the fuel, insurance, maintenance and driver’s salary, the taxable value shall be: in case the cubic capacity of the car is less than or equal to 1.6 litres – Rs 1,800 per month (plus Rs 900 for the driver) and in case the cubic capacity of the car is greater than 1.6 litres – Rs 2,400 per month (plus Rs 900 for the driver).
In case you use your own car for official and personal purposes and the company reimburses the running and maintenance cost, the taxable value shall be: in case, the cubic capacity of the car is less than or equal to 1.6 litres – actual amount met or reimbursed by the employer less Rs 1,800 per month (plus Rs 900 for the driver) and in case the cubic capacity of the car is greater than 1.6 litres – actual amount met or reimbursed by the employer less Rs 2,400 per month (plus Rs 900 for the driver).

The value of free service of all personal attendants including a sweeper, gardener and a watchman is to be taken at actual cost to the employer. Where the attendant is provided at the residence of the employee, full cost will be taxed as perquisite in the hands of the employee irrespective of the degree of personal service rendered to him. Any amount paid by the employee for such facilities or services shall be reduced from the above amount.

For free supply of gas, electricity and water for household consumption, the rules provide that the amount paid by the employer to the agency supplying the amenity shall be the value of perquisite. Where the supply is made from the employer’s own resources, the manufacturing cost per unit incurred by the employer would be taken for the valuation of perquisite. Any amount paid by the employee for such facilities or services shall be reduced from the above amount and the balance will be taxable in hands of employee.

The perquisite on use of assets is to be charged at the rate of 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use.
However, the use of Computers and Laptops would not give rise to any perquisite.

I hope your query is answered.

Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2011 Hi Sumit,

Thank you so much for taking out time and for the detailed explanation.

So if I can only give food coupons worth Rs.3500/- p.m so employee's will save tax on that.

However, the commission/fees/service tax charged can I book it as office expense.Will it be allowed as expense in the companies books.

Also, if it is not a problem, I kindly request you to provide me your mail id.

Thanks again.

Regards.